Next Generation Blockchain Layer-One Protocols Remove Financial Barriers To DeFi And NFT
Opinions expressed by Contractor the contributors are theirs.
Blockchain technology has become a revolutionary force for change on the global stage over the past decade, as Bitcoin has grown from the status of shadow internet money used by criminals to an accepted form of legal tender by governments in countries like El Salvador.
While the applications of distributed ledger technology (DLT) are large and widespread, its potential to help reconfigure the global financial sector offers perhaps the most transformative opportunity in a world where more than 1.7 billion people adults are classified as unbanked.
The creation of secure Layer 1 blockchain protocols capable of hosting smart contracts such as Ethereum has enabled the emergence of decentralized finance (DeFi) and the explosion in the popularity of non-fungible tokens (NFTs), but their popularity Growing has been a double-edged sword, as the increased use of the best networks has resulted in skyrocketing transaction costs and slow processing times.
Many proponents of some of the first and second generation protocols, including Bitcoin and Ethereum, often frequently reassure that developers have made significant strides in addressing these recurring issues, but the fact that the same issues continue to arise. with each bull market suggests that the new generation of blockchain protocols offer the best solution to these long-standing difficulties.
Some of the newer blockchains like Fantom have been widely adopted in recent months as suitable alternatives to Ethereum due to their inclusiveness and easy onboarding experience. Thanks to layer one solutions, users who are unfamiliar with new technologies and users who cannot afford hundreds of dollars for each transaction can now start using blockchain and DeFi.
Related: 5 Reasons To Get Started With DeFi
The rapidly expanding world of DeFi is on its own reshaping the global financial infrastructure, as all manner of stocks, securities and transferable assets are slowly but surely symbolized and stored in digital wallets.
New protocols are emerging daily that allow anyone with an internet connection or a smartphone to access ecosystems equivalent to digital savings accounts but offering much more attractive returns than those found. in the traditional banking sector.
Unfortunately, with most of the best DeFi protocols currently running on the Ethereum blockchain, the high cost of network transactions has come at the cost of ordinary people living in countries where even a $ 5 transaction fee is a significant amount of money. able to support a family. for a week.
This is where competing new blockchain platforms have the greatest opportunity for growth and adoption through cross-chain bridges, a growing number of opportunities to earn a return on new DeFi protocols, and costs of significantly lower transaction.
Fantom and Avalanche both have fully functional cross-chain bridges that allow ERC-20 to be migrated to a corresponding token standard on their networks while Solana has created its “Wormhole” communication bridge that connects to other major DeFi networks, including Ethereum, Terra, and the Binance Smart Chain.
Non-fungible tokens (NFT)
Anyone who hasn’t lived under a rock in the past two months knows that the NFT industry has skyrocketed in popularity as well as prices as all manner of celebrities, sports stars and globally recognized brands have started to donate. a digital one-of-a-kind. collectibles.
Much like during the 2017-2018 bull market, digital collectibles from CryptoKitties to CryptoPunks have broken records in terms of prices paid as well as network congestion and fees generated.
Winning games have also become in high demand applications, as NFT technology allows players to sell in-game items for real money, but high transaction costs have once again taken a toll on those who could. benefit the most from access to these protocols. to bring.
This is another use case that has started to see an explosion of interest spread to Fantom, whose near-cost-free transaction capabilities have allowed users in the world’s most economically disadvantaged areas to access. unrestricted to protocols that can allow them to earn income from daily living.
Instead of having to pay over $ 100 in Ethereum gas fees just to try and participate in NFT action, users can instead use their money to build their NFT wallets and participate in the growing metaverse of digital collectibles.
Related: What’s Holding Back DeFi (& How To Fix It)
Easy to navigate user interface
In addition to their low cost, next-generation protocols and pure proof-of-stake networks also offer an easy-to-use user interface that even the less tech-savvy can navigate.
While many networks require an advanced level of technical experience to operate wallets and transact, Fantom has removed the advanced training required to operate early blockchain interfaces and created a user interface that any modern internet user can use.
Algorand has amassed a vast network of developers and scientists who have helped create a user interface that is simple enough that even well-known crypto projects like digital wallet creator Exodus have chosen the network to host its digital token representations EXIT recently. launched from its regular stock. .
Like any technology, blockchain continues to evolve
For those who existed in the early days of the Internet, few people probably could have imagined the journey that has taken place from using programs like Netscape to explore some of the earliest message boards or chat with their friends to the digital world. current expansive that is social networks and Google searches.
Just as many of those early programs that once dominated the digital landscape are now completely gone, many popular first and second generation blockchain protocols will suffer the same fate as new networks with greater scaling capabilities. and smart contract features will emerge and gain favor in the market.
These emerging projects, which offer lower cost transactions at higher scalability rates, are well positioned to move forward and play a leadership role in helping to integrate the general public and pave the way for a future. blockchain.
The dawn of the blockchain era is now on, and projects like Bitcoin and Ethereum have helped open the door and establish blockchain technology as a force for change on the planet.
Now, as more and more of the world’s population begin to make their way into the cryptocurrency ecosystem, it is time for the next generation of blockchain platforms to arise and take leadership roles in this. digital revolution as decentralized finance and non-fungible tokens begin to emerge. transform global financial systems.
Related: Getting Attracted to DeFi? Here are 3 major considerations